The Overtime Pay Tax Relief Act of 2025 (H.R. 561), introduced in the House by Rep. Don Bacon, proposes a new federal income tax deduction for overtime compensation. Under this bill, employees can deduct up to 20% of their overtime pay—earned under the Fair Labor Standards Act—from their taxable income, provided their adjusted gross income does not exceed $200,000 for joint filers, $150,000 for heads of households, or $100,000 for individuals. This deduction is available to both itemizers and non-itemizers and is set to expire after December 31, 2029.